The reason people find it so hard to be happy is that they always see the past better than it was, the present worse than it is, and the future less resolved than it will be. -- Marcel Pagnol

Over the past five days or so, market players have enjoyed a classic seasonal bounce. The last few days of the year and the first two days of the new year is typically the period when a "Santa Claus Rally" is supposed to occur, and that is exactly what we had.

But does such action really give us good reason to be happier and more optimistic about what is to come? Market players can be highly emotional, and they will be inclined to believe that a few days of seasonal strength mean that there really has been a significant change in market character. While that is possible, it isn't something we want to embrace too readily.

I don't want to sound overly pessimistic, because there really is some improvement in the charts of the major indices. The Nasdaq has some good support starting at 1600 and the S&P 500 starting at 915 or so. We can easily pull back some at this point, and we will still have some very promising potential to the upside.

In the shorter term, we are extended, and further upside is going to be a bit more difficult. Market players have been quite aggressive in chasing some of the moves in energy and commodities in particular, and it is quite tough to find entry points. For example, the PowerShares DB Crude Oil Double Long (DXO) ETN has doubled over the past week or so and is now running into overhead at its 50-day simple moving average. That is a tough buy at this point if you are looking for a chart setup rather than just pure momentum.

My feeling is that the mood is a little too happy here, as the seasonal strength is being regarded as something more meaningful than what it is. I'm also seeing a slew of downgrades from analysts today who are obviously using this bounce to change some ratings. There is a lot of optimism about 2009 being better than 2008, and who can blame anyone for feeling that way?

If we continue to go straight up from here, I'm not going to be participating much, because I'm seeing a bunch of extended charts. I'm looking for consolidation and pullbacks at this point, but I'm optimistic that the pattern in the indices will hold and give us a good base for some better action as the month progresses.

We have our work cut out for us. Good luck and go get 'em. -----------------------------Ülespoole avanevad:

Lyondell Chemical Co., the U.S. arm of chemical giant LyondellBasell Industries, filed for Chapter 11 bankruptcy protection Tuesday.The company, which sought bankruptcy protection along with 79 affiliates, listed assets of $27.1 billion and liabilities of $19.3 billion in its Chapter 11 petition filed with the U.S. Bankruptcy Court in Manhattan.

Weak Data:The good news is that the ISM services index for December came in at 40.6. That is still very low for an ISM index, particularly for services. It was, however, above the expected 36 to 37 range.The bad news is that November factory orders plunged 4.6%. This was much worse than an expected 2.5% decline. Nondurable orders were very weak, dropping 7.4%. Durable goods orders were down 1.5%, which was revised downward from the advance reports of -1.0%. The real surprise was in the nondurables weakness. Businesses are cutting back on orders across the board.Further weak data was evident in the 4.0% drop in November pending home sales. This was even worse than an expected 1% or so decline.These data are not good news from an economic standpoint.The market has been handling bad economic news relatively well recently, on the belief that these are old data relative to future prospects based on a government stimulus package. In this view, the current trends have less relevance than under normal conditions.